Zoetis has a giant dividend increase coming (ZTS)

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Dividend increases are an outward sign from management that the company is doing well and that the company can increasingly reward shareholders. I’m watching for upcoming dividend increases from companies that have a history of raising them. The lists below contain various data points for stocks increasing their dividends next week.

This list is a lite version covering only dividend increases. A full schedule of upcoming dividends is always available here.

How I created the lists

I created the information below by combining the “US Dividend Champions” spreadsheet hosted here with information on upcoming NASDAQ dividends. This combines metrics on companies with a history of dividend growth with upcoming dividend payments. These companies all have a history of dividend growth of at least five years.

Companies are required to pay higher total dividends each year. Therefore, a company may not increase its dividend every calendar year, but the total annual dividend may still increase. An example shows increasing payments each year but with the same dividend over eight consecutive quarters.

Dividend increases example

BAC dividend growth history

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What is the ex-dividend date?

The “ex-dividend” date corresponds to the date on which you are no longer entitled to the dividend or distribution. You must have made your purchase the previous business day. For example, if the date is a Tuesday, you must have bought (or already owned) some stock before the market close on Monday. Be aware that for any ex-dividend stock on a Monday (or Tuesday, if Monday is a holiday), you must own it no later than the previous Friday.

Dividend Series Categories

Here are the definitions of the sequence categories, as I will be using them throughout the piece.

  • King: 50 and over
  • Champion/Aristocrat: 25+
  • Competitor: 10-24 years old
  • Challenger: 5 years and over

Category To count
King 0
Champion 0
Competitor 0
Challenger 1

The main list

The data was sorted by ex-dividend day (ascending) then by sequence (descending):

Last name Teleprinter Trail Yield at term Ex-division date Increase percentage series category
Zoetis Inc. Class A (ZTS) 9 0.61 19-Jan-22 30.00% Challenger

Field definitions

Trail: Years of dividend growth history are from the US Dividend Champions spreadsheet.

Yield at term: The new payout rate is divided by the current share price.

Ex-dividend date: This is the date by which you must own the stock.

Increase percentage: The percentage increase.

series category: This is the overall classification of the company’s dividend history.

show me the money

Here is a table listing the new rates versus the old rates. He also reiterates the percentage increase. This table is sorted in the same way as the first table (ex-dividend day ascending, dividend sequence descending).

Teleprinter Old tariff New tariff Increase percentage
ZTS 0.25 0.325 30.00%

Additional Metrics

Here are a few different metrics related to these companies, including annual price action and P/E ratio. The array is sorted the same as the array above. A value investor may find stock ideas from these companies near their 52-week lows, as they could offer a greater margin of safety and inflated yield.

Teleprinter Current price 52 week low 52 weeks high P/E ratio % discount low High % off
ZTS 212.79 140.85 249.27 45.63 51% off 15% off

Tickers by yield and growth rate

Some investors are more interested in current yield, so this table is sorted in descending order of yield. The table also includes some historic bonus dividend growth rates. In addition, “Chowder’s rule” has been included, current yield + five-year dividend growth rate.

Teleprinter Yield 1 year CEO 3 years CEO 5 years CEO 10 years CEO chowder rule
ZTS 0.61 23.6 36.1 14.8 15.4

Conclusion

Zoetis is on its own this week, with its dividend increase taking effect next week. That’s a very impressive 30% increase, though. Additionally, they announced a $3.5 billion share buyback program. Zoetis has surprisingly managed to have a dividend growth rate of 36% over 3 years, and even over 5 years it has been 15%. The recent pullback also makes equities more attractive than prices seen at the end of 2021.

Be sure to do your due diligence before investing. Thanks for reading.

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